We call for any extension to the regime to remain practical, proportionate, and workable
Thankyou to those members who have provided input and helped shape our response to the consultation on extending VAT liability to online marketplaces. Our response has now been submitted and can be found below.
In summary, we support the Government’s proposal to extend VAT liability to online marketplaces to improve compliance and create a fairer trading environment. However, we argues that marketplace obligations should be proportionate, based only on information platforms can reasonably access and verify, and not extend to sellers’ wider tax affairs. We also emphasise the need for clear guidance and a flexible approach that reflects the differing operational impacts across retail sectors and business models, ensuring the regime is practical, effective, and proportionate.
We recommend that Government:
- base marketplace obligations on information that platforms can reasonably access and verify, without requiring marketplaces to determine sellers’ wider tax affairs or matters outside their control;
- ensure that any Minimum Platform Threshold (MPT) or small seller mitigation, is simple, proportionate, objective and capable of automation, and the level is reflective our members thoughts set out in this response, while limiting opportunities for avoidance or artificial fragmentation;
- provide clear and practical rules for private sellers and second-hand goods, including where VAT treatment depends on information that is not reasonably available to marketplaces;
- recognise differing sectoral and business-model impacts, including complex VAT categories, large product catalogues, and integrated retail models. In particular, HMRC should consider an exclusion for platforms operated by franchisors or brand owners where their own franchisees sell the brand’s goods through an integrated single-brand retail model under common franchise arrangements, standards, and pricing frameworks;
- provide clear guidance, accessible dispute-resolution processes, and appropriate safeguards where marketplaces have taken reasonable steps to comply but rely on information provided by sellers;
- clarity is needed before implementation on mitigation, VAT-rate relief, invoicing, and corrections processes;
- provide clear rules for VAT-registered businesses, including the operation of deemed supply arrangements, invoicing, settlement, input VAT recovery, cashflow and the Flat Rate Scheme;
- allow at least 12 months between final legislation and implementation, with sufficient time for detailed guidance, systems development, testing, and seller communication, supported by a proportionate transitional compliance approach; and
- learn from previous UK marketplace VAT reforms and international experience to ensure that the regime is implemented consistently and effectively.
We will keep members updated on the proposals as they develop .
